In a move that surprised nobody at TCS, President Trump has decided to raise taxes on imports from China from the initial 10 percent on $200 billion worth of products coming from China to 25 percent starting May 10, 2019.
That means $200 billion worth of goods from China, ranging from seafood, chickpeas, various fruit and vegetables, soy sauce, beer, sparkling wine, sake, and building materials like granite, sandstone, and limestone will be more costly. On top of this, the president has threatened to apply tariffs additionally on up to $325 billion in Chinese exports not currently in his crosshairs. Meaning consumers and businesses may experience sticker shock very soon on everything from toys to iPhones and shoes, and a host of chemicals and raw materials.
These actions matter because they are expensive. The cost and pain is seen most notably in the agriculture sector that has borne the brunt of retaliatory tariffs from China (click and download to see our database of affected products here). It is also costly as the Trump Administration has given $12 billion in unbudgeted spending to farm producers affected by the president’s trade war. And now that a trade deal is far from certain, even though the president said himself that trade wars are easy to win, Ag Secretary Perdue is working on a new trade aid package. So not only are American farmers negatively affected by the Trump Administration’s decision to start a trade war on multiple fronts, but taxpayers paid the cost of (partially) mitigating the damage inflicted on the industry because of the administration’s actions. With the president promising via tweet to “[buy] agricultural products from our Great Farmers, in larger amounts than China ever did, and ship it to poor & starving countries in the form of humanitarian assistance” there’s no telling just how costly this latest action may be.
We’ve said from the very beginning that these increased tariffs won’t be temporary. And because the president has labeled himself as Tariff Man, it is up to Congress to stop the trade war before it inflicts even greater damage on the economy. Congress, which controls the power of the purse and can in fact say no to the president, needs to reassert itself and pressure the administration to stop spending taxpayer dollars on fiscally irresponsible blunders like this trade war. All it’s helping us do is lose markets and destroy businesses, and ultimately at the taxpayer’s expense.
We’ve followed – and continue to watch – the trade war very closely, because from the very beginning it was very clear that taxpayers were going to pick up the tab to compensate businesses getting caught in the crossfire of tit-for-tat tariffs. It’s time to end this trade war and give common sense another shot.